The contract with Global Partners also cements North Dakota crude's hold in the East Coast refining belt, where two other refiners already get Bakken crude by rail.

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By BEN LEFEBVRE

Phillips 66 signed a five-year contract for 50,000 bpd of
North Dakota crude oil to be delivered by rail to its Bayway refinery in New Jersey, the company
said Tuesday, a move that underscores how important the North
American oil boom has become to refiners on the East Coast.

Phillips 66's contract with Global Partners also cements
North Dakota crude's hold in the East Coast refining belt, where Philadelphia
Energy Solutions and PBF Energy already get crude from North
Dakota's Bakken field by rail.

Most pipeline construction has focused on bringing
oil from West Canada and North Dakota to the Gulf Coast,
leaving East Coast refiners relying on railcars to bring in
domestic oil.

Under the contract, Phillips 66 will use Global's network of
loading facilities and offloading terminals.
The cost of the deal wasn't disclosed.

Even after shipping costs, a barrel of Bakken crude can be
$10 less than the Brent oil imports that East Coast refiners
have traditionally relied upon. That price difference has
revived the fortunes of refiners in a region where last year
numerous refineries were expected to shut down because of the
high cost of imported oil.

"The ability to get crude from someplace other than the
world market keeps those guys alive," RBN Energy analyst Rusty
Braziel said of the East Coast refining industry.

The East Coast fuel market is the biggest in the country,
with 4.6 million bpd of gasoline, diesel and other
petroleum products sold in October, according to the latest
figures from the US Energy Information Administration.

New drilling methods have unlocked a wealth of oil and
natural gas that had until recently had been considered too
expensive to economically produce.

But logistics, construction issues -- and in the
case of TransCanada's planned Keystone XL heavy Canadian crude
oil pipeline, political protest -- have bogged down new
pipeline projects, leaving rail companies to
capitalize on their ability to use existing routes to
connect.

Last year, Phillips 66 bought 2,000 rail cars to supply
domestic crude oil to its refineries. Tesoro built a 10,000-car
"pipeline on rails" to bring crude oil from the Bakken field to
its refinery in Anacortes, Wash.

Dow Jones Newswires

(Editor's note: The Bayway refinery has a capacity of
approximately 238,000 bpd, according to reports.)

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